doha egypt - gtap · introduction doha came in 2001 with the promises to cut tariffs ontrade...
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Purdue University West Lafayette ‐ USA www.gtap.org
Doha & Egypt
8/10/2008
:Presented byAbir ‐ Amanda ‐ Adam ‐ Bahadir ‐Justino ‐ Mehmet ‐ Beatriz ‐ Peng
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IntroductionDoha came in 2001 with the promises to cut tariffson trade between all WTO members.
Database: GTAP 6.1 with 92 countries & 57 sectorsnarrowed down to 12 countries & regions and 28sectors.
Peter’s paper analyzed the impact of applyingDoha’s formulas on tariff reductions towards allregions!
Our Question: What is the impact on Egypt’swelfare, trade flows, domestic production if it fullyliberalizes tariffs on two of its main sectorstowards its largest trade partner EU.
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Purdue University West Lafayette ‐ USA www.gtap.org
Liberalization of Automotive Tariffs on EU imports into Egypt
8/10/2008
:Presented byJustino De La Cruz ‐ USAAbir El Anwar ‐ Egypt
Doha & Egypt:
Contents
1
2 Experiment Results
3 Welfare Decomposition
Puzzle5
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Experiment Description
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4 Imports Shares
4 Conclusion
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Experiment Description
Version: “Egypt” with same aggregation and Tariffs dataupdated to 2004 using Altertax.
Closure: GE Standard closure + Unemployment in Egyptswap qo("Unsklab", "Egypt") = pfactreal("Unsklab", "Egypt");
Current unemployment in Egypt is about 11%
Shock: Calculate power of tax using Valerie toolShock tms("cartrn","EU","Egypt") = ‐16.58%;
To get: tm ("cartrn","EU","Egypt") = 0
Solve
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Finally
Results
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0
20
40
60
80
Tariff rate Welfare
Welfare results
Base
Catrn Lib from EU_GE
Catrn Lib from EU_GE+Unem
EVInterpretation• Welfare change significantly with unemployment closure.
• Production is not really affected, only by ‐1.4% from base to the two other Exp.
• Egy Imports of cars from EU nearly doubled by cutting the tariffs on EU but Why??
• Total Egy Exports of cars increase by a small percentage of only 5.5% compared to the base. Why??
0.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
Base Catrn Lib from EU_GE
Catrn Lib from
EU_GE+Unem
Cartrn Production & trade flows
ProductionExports Imports_EU
Welfare Decomposition
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Allocative Efficiency
Endowment Technology population Terms of Trade
I & S Prices Preferences Total
WELFARE 6.85 74.65 0 0 ‐6.92 3.78 0 78.37
Welfare impact is dominated by endowment effect
Now, We need to dig into endowment: As a direct effect of the Unempclosure, UNSklab captures more than 95% of the impact.
Qfe(i,j,r) & Pfe(i,j,r) are investigated: UNSklab price increased slightly ,while demand on UNSKlab decreased in Cartrn and is absorbed mainlyby Cons and transportation services
Qfe Decomposition cartrn Con Lmf Min pfbev Trncomsvc CGDS1 e1_afe 0 0 0 0 0 0 02 qva ‐1.372 0.458 0.296 0.215 0.078 0.578 0.5283 e1_ESUBVA 0.321 0.247 0.221 0.225 0.266 0.314 0.174Total ‐1.051 0.705 0.517 0.44 0.344 0.892 0.701
qfe(i,j,r) = ‐ afe(i,j,r) + qva(j,r)‐ ESUBVA(j) * [pfe(i,j,r) ‐ afe(i,j,r) ‐ pva(j,r)];
Expansion effect
Substitution effect
Imports shares
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Total imports of Cartrn into Egyptincreased by only 3% ‐ TradeCreation
Decrease in imports tariff on cartrnfrom EU leads to Trade diversionfrom USA (‐17%) to EU (26%).
Pms(“cartrn”,”EU”,”Egypt”) declinesby 16.6% and does for the otherregions but slightly as a result oftms and CIF changes.
EU share in Egyptian cars marketmoves from 15% to 29% .
ESBM is high and nearly doubleESBD.
0%
10%
20%
30%
40%
50%
60%
Cartrn Imports into Egypt (shares)
Base
Catrn Lib from EU_GE+Unem
Puzzle
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Qo(cartrn, Egypt) = ‐1.37% , Pim(cartrn, Egypt) = ‐6.12
but Price of CGDS increased and :
Output in construction = 0.46
Output in Trncomsvs … = 0.58
Output in CGSDS ………. = 0.53
Conclusions
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Transferring endowment from inefficientsectors to efficient ones do positively impactthe welfare.
Closures do matter in changing the results in aGE model.
Using a GE model added value to the analysis ofinterrelations between different regions andsectors.